Data Demand Fuels Health Catalyst Growth (HIT News)

Health Catalyst, a small, five-year-old company whose two founders have their roots at Intermountain Healthcare, is helping to improve clinical quality, and changing the cost structure for hospitals – big and small – across the country with its data-warehousing platform.

The company is not only attracting new clients but also significant investments. The latest, announced in January, was $33 million from Norwest Venture Partners and Sequoia Capital, both based in California, and Sorenson Capital of Utah.

The demand for its technology shows no sign of abating.

That may be because the promise of electronic health record (EHR) systems often falls short for many hospitals and health systems. Health Catalyst’s technology works in tandem with EHRs – Epic and Cerner, for now – and pulls relevant data for analysis to help healthcare systems do what they do better while also eliminating waste.

“What the co-founders experienced way back in the ’90s at Intermountain was that the implementation of the EHR solution is the right first step,” said Health Catalyst chief executive officer Dan Burton. “But without the next step in terms of organizing that electronic data so that clinicians can actually use it and identifying where waste exists to systematically reduce that waste and be able to measure the improvement, you’re not going to get the kind of cost structure improvement that we need to see. That’s fundamentally the problem we attack.”

Todd Cozzens, venture partner at Sequoia Capital, is bullish on Health Catalyst, calling it better than the big box firms – “the IBMs and Oracles of the world.”

“It’s much more intuitive, much more clinically focused,” he said. “The other piece is this incredible content they have around waste reduction, LEAN process, Six Sigma. You take these two core competencies, and it goes way beyond an electronic data warehouse. It’s a performance management and care transformation system all in one.”

Among Health Catalyst customers are Stanford Hospitals and Clinics, Indiana University Health and Texas Children’s Hospital.

Steve Barlow and Thomas Burton founded Health Catalyst. Minneapolis-based Allina Health became their first customer.

“No, it was not that bold,” said Penny Wheeler, MD, Allina Health’s chief clinical officer. “They had a demonstrated track record even before we became their first client because they had both worked pretty extensively in an organization committed to quality and decreasing variation that wasn’t helpful to patients,” she said.

Allina is an Epic shop. “We are very integrated,” Wheeler said. “We are one of those systems that has had it in place at all our hospitals – all the full meal deal.” The Epic system has been at work across all of Allina’s hospitals and all of its clinics for five years now.

“We knew what it was like to tie one information system together,” Wheeler said, “but we also found out – and others will – that that was insufficient.”

“One thing that really gets us up in the morning is contributing a health platform to really change healthcare for the better,” Dan Burton said. “We’ve been very excited to see the kind of tangible results that Allina has achieved.” Burton mentions a length-of-stay project that resulted in a $10 million cost savings for that one project.

Wheeler, an obstetrician/gynecologist, highlighted another project – one in her area of expertise. It’s “black-and-white science,” she said, that you must not induce labor in a pregnant woman before 39 weeks gestation “because it increases the risk of Caesarean section; it increases risk of babies going to expensive special care nurseries or neo-natal intensive care units; and it increases labor time, which doesn’t do a lot of good things for experience.”

Until Health Catalyst, Allina had no way to know whether induction pre-39 weeks occurred and how often.

“While all of my colleagues said, ‘We never do that; we know we’re not supposed to do that,’ we found out through this data pull that they were doing it 14 percent of the time.”

With Health Catalyst, Wheeler said she is able to correlate this finding not only to quality of care, but also to cost and to where variations in care might be occurring.

“So we can say, it looks like for heart catheter stents, maybe there’s a lot of variability there,” she said. “We better look at that and see is there any way that we can improve the quality, and make sure that any variation that’s occurring is because what the patient needs and not just because we all think we should do things differently.”

As Cozzens sees it, the type of inquiry into relevant data that is taking hold at Allina and other health systems across the country is “the next big thing in healthcare.”